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The Evolution of Corporate Treasury

Operations in 21st Century


(Blue Ocean Finance).

Corporate FINANCE [3202]

PREPARED FOR:
TAHMINA AHMED
Lecturer, dept. of AIS DU

PREPARED BY:
Group - ASTRA
Accounting & Information Systems
FBS | University of DHAKA
GROUP LIST.
Group name: ASTRA
Section: C
AIS 19th batch, DU

Group members:

Faraaz Nasir Hossain 19-156


Md. Jubayer 19-169
Khairum Maksuda Hoque Adeeba 19-172
Md. Noman Sarker 19-174
Nazmul Haque 19-179
Syeda Fatema-Tuj-Juma 19-180
Rabbi Al - Sifat 19-182
Sonjit Biswas 19-184
Kamrul Hasan Ashik 19-199
Md. Forhan Uddin 19-204

Statement of problems / limitations of existing treasury practice: Inefficiency in the


current existing problems, little independence for subsidiaries, lack of close relation
between subsidiaries and in house banking, loss from currency conversion cost, No
exploration activity for finding new blue ocean.
Our proposed solution: To increase efficiency we propose creating several branches
of centralized In house bank and place them in the regions where the MNCs hold
subsidiaries. These branches will be controlled directly by central In house bank &
will be doing the in house banking operations closely with those subsidiaries. The
main stream fund allocation decision will be taken by central in house bank whereas

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the territory branches of in house banks will be responsible for collecting repayment
and assisting local subsidiaries to manage treasury.
Adoption of the changing treasury trends: The changing trend is to centralize the
corporate treasury. This trend is highly efficient in reducing cost and net working
capital. Success stories of this trend are Roche and Lenovo. Though its not feasible
for all MNCs to go for this strategy but there proper control measures and planning
facilities and existence of value innovation then MNCs should follow the changing
treasury trend.
What makes it a perfect model: First, Now subsidiaries can work more closely with In
house bank & the in house banks will now have a better understanding of
subsidiaries operation & their demand and treat them accordingly. The subsidiaries
will enjoy a little more freedom in decision making though their treasury is still
controlled by a centralized in house bank. Surprisingly though the treasury
management is still centralized, the subsidiaries are more independent & can work
with In house bank more closely. Second, now we can explore Blue oceans (new
potential customers/market) more easy way. We recommend the branches of in
house bank to have a R&D for finding new Blue Ocean. When the branches will
operate in those regions they will have a great understanding of that environment &
potential markets of that region which is not possible by central in house bank.
Third, if cash flows from any business segment falls it will hamper less to other
subsidiaries. Fourth, as the branches of in house banks & the subsidiaries will be
situated in the same region the fund transferring cost will be less. The reason is that
they both deal in same currency so there is no currency conversion cost. Fifth,
through this branches of in house banking situated in different regions we can
exploit profit by forming arbitrage triangle if there any arbitrage opportunity exists.
Contingency Solution: As consignees to our main proposal we propose the following
two methods for innovating Blue Ocean Finance -
1. Starting of collection of receivables through IHB
2. Creating a global database system and selling off unwarranted information.

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